Medicaid Planning with an Irrevocable Trust

Planning - Medicaid Planning with an Irrevocable Trust

Good afternoon. Today, I learned about Planning - Medicaid Planning with an Irrevocable Trust. Which could be very helpful in my opinion and you. Medicaid Planning with an Irrevocable Trust

You know that you, your spouse, or a parent is facing a nursing home stay. It's not tomorrow, but it's not 20 years away, either. Is there a good technique to safe your assets so that the nursing home won't wind up with your life savings? Actually, yes...it's called an "irrevocable trust." Let's take a look at how it works.

What I said. It isn't the actual final outcome that the actual about Planning. You check out this article for information about anyone want to know is Planning.

Planning

An irrevocable trust is one that cannot be revoked, amended, or changed once it is signed. Do not confuse this with a "Living Trust" done for probate avoidance purposes; that type of trust is revocable and will not work for Medicaid planning. Your elder law attorney would draft the trust for you and then help you in transferring some part of your assets into the trust. (I am omitting many details of how the trust is to be drafted, set up, and funded. For a detailed conference of such trusts in the Medicaid planning context, see my book, "How to safe Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets.")

A transfer into such a trust is considered a gift for Medicaid eligibility purposes. Thus, the usual "penalty period" and "lookback period" rules apply to the gifts into the trust the same as they would with an outright gift.

For example, assume you originate your new trust and immediately transfer 0,000 into the name of the trust, leaving you with only minimal other countable assets. Assume you do this on January 1 of Year 1. Also assume that the state you live in has a "penalty divisor" of ,000, meaning that there is one month's penalty for every ,000 worth of gifts.

Here's how the rules play out:

Penalty Period. Since the estimate of the gift was 0,000, if you went in to apply for Medicaid the next day, there would be a "penalty period" (i.e., period of time that you would be disqualified from receiving Medicaid assistance) of 36 months (0,000 / ,000 = 36).

Lookback Period. For any gift made on or after February 8, 2006, if you apply for Medicaid within 5 years of such gift, there will be imposed a penalty period. So in our example, if you apply for Medicaid at any time before January 2, Year 6, you will be faced with a 36-month penalty period that begins on the date you apply! That's right---even if you make the gift today and apply for Medicaid in 4 1/2 years, you will have to wait an additional one 3 years because of the penalty! "Gee, I could have just waited an additional one 6 months and I'd be out from under the lookback period and have no penalty!" Exactly. So be meticulous of applying too early!

But what if you might need nursing home care prior to Year 6? All your money is tied up in the trust, so how can you pay for the nursing home? Essentially, your house members will have to pay your expenses for that period of time. (It may be potential for the trust to be drafted so that money in the trust can be distributed to your house members for this purpose, but this must be very considered done in order to avoid serious trouble.)

In that case, the big interrogate is, when do you apply for Medicaid? Of course, you must genuinely have a curative need for nursing home-level care in order to apply. But if you want nursing home care in Year 1 or Year 2 and apply for Medicaid at such time, there will be a 3-year penalty period from the date you apply. In other words, you will be eligible to re-apply for Medicaid in Year 4 (if you apply in Year 1) or Year 5 (if you apply in Year 2). Obviously that is better than waiting for the expiration of the whole 5-year lookback period, which won't occur until Year 6.

However, if you don't need nursing home care until at least Year 3, you are better off not applying for Medicaid until after the faultless expiration of the lookback period, i.e., in Year 6. That's because if you apply in, say, June of Year 3, you will still be disqualified for an supplementary 3 years, i.e., until June of Year 6 (instead of only until January of Year 6). And if you apply in Year 5, you won't be eligible until some time in Year 8!

It's foremost to remember that the numbers above only apply to this single example. You must work out the details with your elder law attorney, since the optimal time to apply will be governed by your health, your other (non-trust) assets, your family's quality to cover your expenses, the estimate you gifted into the trust, your state's penalty divisor.

I hope you receive new knowledge about Planning. Where you can put to utilization in your daily life. And most significantly, your reaction is passed about Planning. Read more.. Medicaid Planning with an Irrevocable Trust. & seo blogger , ทำ seo